Stores tailored to fit

AA Concepts designs boutiques to appeal to varying demographics within a city

By David Kaplan

Copyright 2006 Houston Chronicle

Published July 19, 2006

AA Concepts is not a household name, but under the radar, the Houston-based retailer flourishes.

The company has three stores in Houston and 13 total in the Texas-Louisiana region, with plans to open five new locations over each of the next several years.

Each of its Houston apparel boutiques is a different concept, but all are hip, youthful and tailored to suit their respective Galleria, Montrose and Rice Village locations. The company has four concepts in all.

Retail consultants say that designing a store to fit the demographic is a good idea, but the strategy comes with challenges.

When managing a variety of concepts, a company should be careful not to dilute itself in talent or investment capital, said Love Goel, chairman and CEO of Growth Ventures Group, a Minneapolis-based retail investment firm and the former chief operating officer of Federated Department Stores.

AA Concept's Galleria store, called Duo, sells what a stylish young man or woman might wear to a nightclub, while Method in Rice Village has a more casual, sportier take on a similar style.

Wish in Montrose resembles a vintage store and has a "funky, urban, sassy, trendy" ambience, noted assistant manager Manny Losoya: "We're supposed to be Grandma's attic."

The fourth concept, Fabrik in New Orleans, is for young-at-heart women ages 35 to 45.

The almost five-year-old AA Concepts has big expansion plans, according to William Shoemaker, its operations director. Four new concepts, which would include stores less focused on clothing, are on the drawing board, he said.

Juggling a variety of concepts takes a lot of discipline, said Dan Skoda, managing partner for D&R Consulting and a former senior executive at Marshall Field's and Neiman Marcus.

Unlike a one-concept retail strategy, "you can't put it all in one box and crank it out," Skoda said.

When taking a generic approach with multiple locations, a retailer gets discounts from buying in volume and spends less per store on advertising, he said.

On the plus side, AA Concepts is probably developing a loyal clientele, Skoda said.

Its own designs

AA Concepts designs most of its moderately priced apparel and contracts out its manufacturing. Producing its own merchandise increases the company's profit margins, Shoemaker said.

There is some overlap in merchandise from concept to concept, mostly in handbags, footwear and accessories. The more the company grows, the less overlap there will be, he said.

By tailoring the store to the neighborhood, "they can focus on key demographic segments and find just the right price point and in-store experience," Goel said.

Economy of scale in buying is not a big issue, because with trendy boutiques, style is more important than price, he said.

"They fulfill a niche a lot of landlords are looking for," said Monte Large, an urban broker with Wulfe & Co. who is working with AA Concepts on various properties, including one in downtown Houston that will house a lifestyle store, where customers can buy a variety of home products.

"They think like a national company, but still have the attitude and feel of a one-of-a-kind boutique and add a distinctive touch" to a shopping area, Large said.

City patterns

Shoemaker noted that most cities have similar shopping districts: downtown, bohemian, upscale trendy, etc., so he generally knows where to drop each concept in a particular town.

Finding the right spot has been a learning process, he said.

"In the past, we had a location that did not work for the concept and we've tried to get better with our research," he said. "We have no plans to go to the East Coast. We don't understand that area well enough. Our focus is the Sun Belt."

The key to managing growth is to stay "small" while getting bigger, Shoemaker said.

"Our area managers never focus on more than five stores, and each store hears from their area manager several times a day," he said. "They're like a coach."

Silent partners in Texas

The company has 78 employees with the design team based in Los Angeles. Several of its principals, including Shoemaker, once worked for defunct contemporary apparel retailer Merry-Go-Round Enterprises.

Investment capital comes from silent partners who live in Texas, Shoemaker said.

By having four store names, and even more names in the future, the company misses out on branding opportunities, but Shoemaker is unconcerned:

"We're about being in the right location, with the right product and right people," he said.

david.kaplan@chron.com

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